Tulsian picks Zee News, SKS Microfinance, BHEL and L&T

 I estimate that the July 23 to August 3 period is time for the government to demonstrate performance- from the hike in import duty on power equipment and increasing diesel prices to allowing the FDI in retail. I am positive on three stocks maybe in the order of preference - BHEL, BGR Energy and L&T.

Below is the edited transcript of his interview to CNBC-TV18.

Q : Dish TV and Zee News both have announced their numbers which stock would you pick now?

A: In Dish TV results, if you see the PAT it shows that there is saving on account of depreciation but on the other hand the same amount of overall PBT is lower by Rs 17 crore. There is quiet a good demand for Dish TV on account of digitalization. I am not happy with the result though the market has given thumps up to the results.

If you see the interest burden has been has increased by Rs 12-13 crore. I was expecting EDBITA of Rs 155 crore as opposed to Rs 145 reported in the Q4. I am taking a sequential call on the stock. I feel the result is flat to neutral. I think Zee is a better stock and I have a buy call on it. However, I will be looking to go for profit booking.

Q: What is your view on SKS Microfinance ?

A: I have a positive view on this stock and expect the stock to touch Rs 120 crore in next two-three months. Three-four days back there was indication that the company may report a loss of Rs 30-50 crore in Q1, then also at that time I indicated that it made a good entry point to but the stock when the stock corrected and touched Rs 80.

Post preferential allotment by the company, I won't be surprised to see a loss of Rs 30-50 crore in Q1. Majority of their fund to the extent of Rs 700 crore still remains undeployed as on March 31 because of the monetization of some of their debt.

So, I am keeping a positive stance because from hereon. The loss of Rs 300 crore which we seen in every quarter on account of write off and margin contractions. Going ahead looking at the positive net worth of the company and company's plan to raise Rs 3000-3500 crore in whole of the financial year will gradually definitely improve the financial performance from hereon. Though we have seen a huge run up today, I still maintain a positive view. Technical profit booking may come at Rs 100, but I expect the stock to touch Rs 120 in two-three months.

Q: Would you bet on Bharat Heavy Electricals Ltd ( BHEL ) and Larsen & Toubro (L&T) ahead of the Cabinet meeting today on expectations of a decision on a 21% import duty on power equipment?

A: I am quite confident of a decision. I estimate that the July 23 to August 3 period is time for the government to demonstrate performance- from the hike in import duty on power equipment and increasing diesel prices to allowing the FDI in retail.

So I am quite hopeful that something is likely to happen as it will immensely benefit the economy in curtailing the current account deficit. The financial health of the entire sector, not just of BHEL or L&T, but other companies like BGR Energy , JSW Energy , and Bharat Forge will receive a much-needed boost. All these companies have been ramping up capacity thanks to new technology tie-ups. I am positive on three stocks maybe in the order of preference - BHEL, BGR Energy and L&T.

Q: Would you buy Maruti at these levels or do you think the situation has become so grave that there could be a lot of downside for the stock now?

A: I am quite apprehensive on the situation. The situation may turn grave with news of the company initiating the use of police force and issuing arrest warrants against 3,000 workers.

This is a relapse of an earlier dispute which was supposed to have been resolved once for all. But now it is doubtful that any new formula is likely to last as the fear of a relapse remains a big concern on the stock. I wont be looking to buy the stock atleast till the level of maybe Rs 1,060 or Rs 1,070.

Q: Post numbers, Crompton Greaves has violently reacted on the downside? What are you expecting from the earnings tomorrow and what kind of trajectory do think the stock would take?

A: Every time you keep hopes on this company’s performance and it is only the power system division which has to perform on the global front. I have been keeping my negative stance on the capital goods, metal and public sector banking stocks in terms of the results performance, which they are likely to post.

I have a same view because one don’t have any fear on the consumer product division and domestic operations. It is only the global operations, which have been spoiling the EBIT margin of the company to as low as 5%. If the company is able ramp up to 8% on the power system business or power system segment, I think that will be seen as positive, but it is unlikely to happen.

So, one needs to keep a close watch, I don’t think any positive surprise will happen in the stock, but it is better to remain light and remain away, at least not create any trading positions in the stock.

Q: How would you view the moves that we have seen in BPCL and ONGC , BPCL up about 3% while ONGC closed soft?

A: From Monday onwards there will be expectations of hike in diesel and LPG prices. I am expecting to play on the same theme and expect diesel prices to increase by Rs 3-5 per liter and Rs 50 on per LPG cylinder. So, this will be seen positive for all three oil marketing companies coupled with the upstream as well because they will be having the lower burden of sharing the under recoveries.

Whenever there is any technical or positive view coming in into the OMC stock, BPCL takes the lead followed by HPCL. There is no point in trading in IOC as there is no trading fervor in that stock. So keep a positive view on all these three stocks from Monday onwards from the price hike point of view.